holding that because the agreement between a manufacturer and its wholesale distributor unambiguously provided for a non-exclusive relationship, the manufacturer did not breach the agreement by selling products directly to dealers in the distributor’s sales area
How later courts described this case
- holding that because the agreement between a manufacturer and its wholesale distributor unambiguously provided for a non-exclusive relationship, the manufacturer did not breach the agreement by selling products directly to dealers in the distributor’s sales area
- holding in tort case that plaintiff was not entitled to nominal damages because plaintiff did not request such an instruction, either by choice or inadvertence, and thus, the plaintiff should bear the consequences
- finding that a showroom/marketing center constituted a qualifying place of business because the franchisee “regularly used th[e] facility for activities that were an integral part of the sales process”
- noting that a federal court is “not free to impose our own view of what state law should be” (citation omitted)
Written by the judges who cited it.
The opinion
SLOVITER, Chief Judge,
concurring and dissenting.
I am happy to join the majority’s careful and persuasive opinion in all respects except one: although I believe it is a close question, I cannot agree that the Distributor Agreement unambiguously permitted Amana to sell directly to all dealers in Cooper’s territory. I believe that the district court did not err in determining that the distributorship agreement between Amana and Cooper was ambiguous and in submitting that issue to the jury. Moreover, I believe that once the issue was properly before the jury, there was adequate evidence from which the jury could have found that Amana’s decision to sell directly to P.C. Richard & Son, Cooper’s largest account, and to other local dealers was a breach of contract.
The majority bases its decision that the agreement unambiguously reserved to Ama-na the right to sell to retail dealers such as P.C. Richard on (1) the designation of Cooper’s “right to purchase from Amana for resale” as “non-exclusive” and (2) the preface of Amana’s reservation of “the right to make sales directly or through other channels of distribution” to listed categories with the words “including, but not limited to, sales” to those categories. Admittedly, the contract reflects an understanding that Cooper’s right to sell was not exclusive, even within its territory, and that the listing of certain categories to which Amana could sell was not exhaustive, but it does not necessarily follow that Amana unambiguously reserved the right to sell directly to every customer in Cooper’s territory.
The first provision on which the majority relies states that the “Distributor shall have the non-exclusive right to purchase from Amana for resale.” App. 3979 (emphasis added). Patently, this does not apply to Amana itself. The “purchase for resale” presumably applies to companies such as Cooper, which sell to retailers, and the provision’s applicability to P.C. Richard, which sells only to consumers, is unclear. Thus, there is some ambiguity whether or why this provision has any application to Amana’s right to sell directly to a local retailer.
The other provision on which the majority relies is the reservation clause. Here Amana did indeed reserve the right to make sales *286 “directly or through other channels of distribution” and prefaced the list of the other “channels of distribution” with the words “including, but not limited to.” App. 3981. I find this more ambiguous than does the majority because none of the enumerated categories resembles a local retail account, such as P.C. Richard, and Cooper was unlikely to be in a position to sell effectively to any of the enumerated accounts. The point is not that we could say with certainty that Amana did not reserve the right to make direct sales to retailers, but merely that the issue is not clear as a matter of law. This is markedly different than the contract that was at issue in Manchester Equipment Co. v. Panasonic Indus. Co., 141 A.D.2d 616 , 529 N.Y.S.2d 532, 533 , appeal dismissed, 72 N.Y.2d 954 , 534 N.Y.S.2d 667 , 531 N.E.2d 299 , and appeal denied, 73 N.Y.2d 703 , 537 N.Y.S.2d 491 , 534 N.E.2d 329 (1988), where Panasonic had expressly reserved “the unrestricted right to solicit and make direct sales of the Products to anyone, anywhere.” (emphasis added).
Moreover, under Iowa law, the language reserving sales to Amana should not be read in isolation. The ambiguity vel non of contractual language must be determined by looking at the contract as a whole. As the Iowa Supreme Court said in Freese v. Town of Alburnett, 255 Iowa 1264 , 125 N.W.2d 790, 792 (1964), “[Ajmbiguity appears when a genuine doubt appears as to the meaning of a contract, and the instrument must be construed as an entirety.” Moreover, “a contract will not be interpreted giving discretion to one party in a manner which would put one party at the mercy of another, unless the contract clearly requires such an interpretation.” Iowa Fuel & Minerals, Inc. v. Iowa State Bd. of Regents, 471 N.W.2d 859, 863 (Iowa 1991).
In Freese , the issue was whether a contractor who had drilled a well for a town under a contract requiring him to “[fjurnish and install all equipment for test pumping” for a “[l]ump sum [of] $500.00” had an obligation to conduct a second test pumping after the well caved in. 125 N.W.2d at 792 . The town contended that the contract unambiguously required the contractor “to test pump [the] well as many times as was necessary to satisfy the Town’s engineer, for the sum of $500.00, in order to complete his basic contract.” Id. The trial court, after considering evidence presented, refused to accept this contention and found the contract ambiguous, a somewhat different approach to ambiguity than followed by those courts which look only to the contract. The Supreme Court of Iowa stated:
Considering the evidence that this is a time-consuming and costly operation and that the contractor was required to follow implicitly the directions of the engineer, the trial court found considerable doubt as to the meaning of this contract provision. We must agree.
Id. The Court then stated, “It would be most unfair and inequitable to hold [the contract] required the contractor to perform this expensive task as often as required by the engineer.” Id. at 793.
Thus, we must look in the first instance at the entire contract to ascertain whether it is consistent with all of its provisions to construe the provisions relied on by Amana as unambiguously giving it the right to sell directly to Cooper’s largest customer, one who accounted for one-third of its total Amana sales, and 60% of its New York Amana sales. In making this inquiry, I do not suggest that a court should interpose terms into the contract that it deems fair and equitable but merely that the court should decide from an objective standard whether the provision on which the party relies is unambiguous when read in context of the entire contract.
In this case, we should look at whether the obligations that the Distributor Agreement imposes on Cooper are consistent with a reservation to Amana of the right to sell directly to retailers in Cooper’s territory. Like the Iowa Supreme Court in Freese , I have “considerable doubt” whether they are, especially considering that 78% to 100% of Cooper’s business was derived from the sale of Amana products. For example, Cooper was required to use its best efforts to promote sales and “[t]o accept a minimum quota determined by Amana based on sales potential in the territory.” App. 3979. Such a sales quota would be meaningless if Amana could undersell Cooper at will by selling directly to Cooper’s customers. In addition, the Agreement obliged Cooper to “purchase and maintain an appropriate inventory of all Products in accordance with Amana’s written programs and policies.” Id. Such a provi *287 sion had the potential of stranding Cooper with useless inventory if Amana could sell directly to the retailers.
Reading the contract as a whole, I believe it is ambiguous as to whether Amana had the right to sell directly to retail dealers in Cooper’s territory, and that the district court did not err in submitting the question of contract interpretation to the jury. Therefore, I respectfully dissent in that respect.
Present: SLOVITER, Chief Judge, BECKER, STAPLETON, MANSMANN, GREENBERG, HUTCHINSON, SCIRICA, COWEN, NYGAARD, ALITO, ROTH, LEWIS, MeKEE, and SAROKIN, Circuit Judges, and SCHWARZER, District Judge.